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Prepaid Phones

Get information on prepaid phones and learn about their features.

Prepaid phones can help keep kids from using too many minutes. [©Jupiter Images, 2010]
©Jupiter Images, 2010
Prepaid phones can help keep kids from using too many minutes.

Prepaid phones are usually similar to normal cell phones in design, functionality and voice quality. Users can talk to others, access the Internet, take pictures, play games and use text messaging on prepaid phones. The main difference is that they don't require long-term contracts, and eliminate the worry about end-of-the-month overcharges.

The San Antonio Business Journal cites a 2007 Jupiter Research study that revealed 10 percent of U.S. cell phone users had prepaid plans. A brand-new, prepaid cell phone comes with a certain number of units (or minutes) so it's ready to use once a customer activates the phone. Consumers also have the option of purchasing additional time by either buying cards from a store, using a code on the phone itself, calling the company or ordering more time online.

Advantages of Prepaid Phones

People choose a prepaid phone over a long-term plan for various reasons:

  • To keep a backup phone
  • To more easily track phone usage expenses without worrying about overcharges
  • To use on a short-term basis, such as during vacations and hospital stays
  • To try out a cell phone and see if it's something the person will use
  • To pay for phone charges with cash rather than a credit card or checks

Choosing a Prepaid Phone Service Provider

When choosing a prepaid phone service provider, carefully review the various types of plans. CNET's Quick Guide offers unbiased reviews of some of the major prepaid cell phone carriers. Compare the rates for talk minutes and texting. Different phone plans have different areas of service and some may charge roaming fees for calls made outside the service area. Consider where the phone will be used the most and purchase a phone that has coverage in that area. If the user makes international calls, make sure the provider offers both international calling service and reasonable rates for that service.

Phones generally have a service time of 30 to 90 days. If used infrequently, its best to get a phone with a longer service time. Some companies offer refill cards that are valid for a year of usage. Other companies offer lower rates for people who want more talk and text time.

Choosing a Phone

After choosing a plan, the next step is choosing a phone. Each prepaid phone company offers certain types and models of phones that are compatible with their service. Decide which features enhance phone usage, such as Internet access or built-in cameras. Also consider whether additional charges will apply to use the features. For example, a phone may be designed to handle text and picture messaging, but additional charges will apply under some plans. Users can easily upgrade the phone if different features are needed later.

There are two common ways to purchase prepaid phones: in a store or online. Many stores carry prepaid phones and phone cards in the electronics section of the store. This is a good option for those who need a working phone immediately or for those who do not have Internet access. Another way to purchase prepaid phones is online, either at service provider Web sites or retailers who carry prepaid phones. While it might take longer for the phone to arrive, it's easier to shop around and look for the best deal or even buy a refurbished phone.

Prepayment Options

If a person does not have a credit card, the best option is to purchase a phone card from a store. The card has a code that can be programmed into the telephone to add minutes. Different phones have different phone cards so its important to purchase a card compatible with the phone plan.

Minutes can be purchased online through a provider's Web site with a credit card. Some companies also offer the option of adding time directly from a phone with a PIN code. To do this, the customer must set up the account with a credit card and create a PIN. Another option is to use monthly prepaid plans, in which service time and minutes are added automatically on a monthly basis. The charge is added automatically to a credit card the consumer provides to the company offering service.

Using a Prepaid Cell Phone

New prepaid cell phones come with detailed set-up instructions. If purchased at a store, many phones will be activated at the time of purchase. Otherwise, activate it by calling the company or going to the company's Web site. Set aside approximately 10 to 15 minutes for activation. Once the phone is activated, minutes are deducted with each call until all service time or minutes are used up.

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